India: Foreign branches outside India; development charges on long-term leases

India: Foreign branches outside India; long-term leases

The KPMG member firm in India has prepared reports concerning the following developments (read more at the hyperlinks provided below).

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  • Income attributable to taxpayer’s foreign branches not taxable in India: The Bombay High Court held that income attributable to a taxpayer’s foreign branches, permanent establishments (PEs) outside India, is not taxable in India. When the taxpayer has a PE abroad, the taxpayer must produce evidence regarding the payment of taxes on income of these establishments abroad. On production of such evidence, the taxpayer would be entitled to the appropriate tax treaty-related relief. The case is: Bank of India. Read a January 2016 report [PDF 382 KB] 
  • Development charges paid by lessee on long-term lease for acquiring an industrial plot not rent and not subject to tax withholding: The Jaipur Bench of the Income-tax Appellate Tribunal held that the amount of development charges paid by a lessee with respect to acquiring a 99-year lease for an industrial plot is not rent. Therefore, the development charges are not subject to tax withholding tax. The case is: Gupta Fabex Pvt. Ltd. Read a January 2016 report [PFD 383 KB]

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